WEEKLY MARKET REPORT

Week Ending 1^st July 2011

Northern Micron Indices Comparison: Source of information: AWEX

THE CORRECTION WE HAD TO HAVE?

A reality check this week as the talk of a correction over the past few weeks came to fruition and put everyone out of their misery as the EMI gave up 27 cents to finish the season at 1409 cents. This week’s falls snapped a fifteen day rising streak with both days suffering double digit losses. The national offering of 31,300 bales was the second smallest three-centre catalogue in 12 months. The middle microns took the brunt of the falls as 19.5 to 21s slumped 70 to 85 cents. Finer categories (18.5 and 19) and 22 and 23s were back 25 to 45 cents. Superfine indicators bucked the falling trend and posted modest gains of 5 to 20 cents on the back of a good selection and renewed Italian interest. As is nearly always the case off types with heavy cott, colour and high vm were discounted greatly with the odd lot almost neglected. The reasons for this week’s falls vary from the anticipated correction discussed earlier to the rising AUD$ to larger than expected quantities over the next two weeks before the annual 3 week winter recess. It seems now that the buyer who was holding stock in China may have got his wish of a cheaper market as they had not booked up a bale for over four weeks and virtually been on the sidelines for the past fortnight. Hopefully this week’s fall allows mills to purchase some stock and stabilise the market. A rise in currency will nearly always be used as a reason for a falling market.

The skirting market was not affected nearly as much as the downward trend of the fleece room. Types containing vm levels under 5% came under renewed pressure and lifted in value by as much as 30 cents with the emphasis being on the “better” style pieces and bellies. Again, high vm lots with colour, cott and jowl were discounted heavily. After a solid opening session, cardings lost ground on the final day as fine locks and crutchings surrendered 15 to 20 cents with stains unchanged. Crossbred types bucked the falling trend adding up to 5 cents to last week’s values.

A terrific year for the wool market! A rise of just over 500 cents, (898 to1409) and most of that since November 2010. This equates to a 57% increase, outdoing the 45% rise in 1988. In US cents terms, the rise is a staggering 97.9% - 765 to 1514 cents. Just two weeks ago the rise hit 99.5 %. Incredible numbers considering the AUD$ recorded a rise of 22% (85 to 107) in 12 months. Good news, construction has finally started on our new wool store, with photos of a very relieved manager and wool store manager on our web site (www.macwool.com.au and go to ‘Weekly Market Report’). Predictions for next week look tough, but a stable market would be a good outcome.

AgRisk FDIC Indicative Quotes 01/07/11

MAJOR AUCTION BUYERS (Bales)

Eastern Market Indicators (AUD cents/kg clean)                                               AUD/USD Currency Exchange

                Eastern 1409 cents (ê27) compared with 24/06/11                               1.0747 é 0.0199 compared with 24/06/11

                Northern Market Indicators (AUD cents/kg clean)

                Northern 1455 cents (ê36) compared with 24/06/11